This subject comes up from time to time here. We discuss and argue about social security, medicare, etc. - how much we pay into it, etc.
Watch this. And while you are watching - understand that anything that your employer pays on your behalf is in fact, part of your compensation. It is money that would have or could have been paid to you directly.
Add the fact that paying this tax, you lose the ability to invest it and earn a return on it. The general rule is that the amount will double in 7 years - every time you pay - in 7 years that amount would have doubled.
It's called the time value of money. You lose this.
Now, do the math and it becomes painfully obvious that everyone that works and contributes to social security and medicare is getting screwed - big time. You work for 47 years and pay all of that money in and lose the money you could have made in interest on it and then only get a percentage back after you retire. The rest goes to people that didn't contribute and was spent by our so-called representatives to help them get re-elected.
Remember, you still have to pay medicare premiums and this will be doubleing in 2014. And now you have to pay tax on your social security.
Lets show an example to illustrate: (using only the amount that YOU contribute)
Lets use an interest rate of 5%. Lets use an average of $3000 contributed per year over the course of 47 years of working (age 20 to 67). You most likely paid less in the first 23.5 years and more in the later 23.5. Even comounding yearly instead of weekly or monthly (like you actually pay) you come up with $534,358 at the point of retirement.
Sorry, but to say that you will be getting $534,358 back before you die is comlete and utter BS.
Now, add the amount that your employer also pays in, that you don't get as compensation from them and you get $1,067,712. And that's just the social security side.
Here is the site that you can use to calculate future value of annual contributions if you want to plug in something different: http://www.investopedia.com/calculat...#axzz1fURHpsjf
I don't want to hear any more BS about how we are getting such a great deal from social security. It simply isn't so. Especially when you consider that the feds are still earning interest on your money as they are making the pitiful little payments back to you.
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